A survey conducted among teenagers in February 2022, highlights important information about their understanding of personal finances. As it turns out, 54 percent of the teens who participated in the survey admitted they felt ill-equipped for managing finances as they transition into adulthood. Interestingly, 69 percent revealed that the increasing cost of higher education had affected their decision to pursue further studies.
Moreover, our study portrays that an alarming 41 percent of teenage respondents are not receiving any education about financial literacy in their schools. This insight raises a pressing concern – how can we, as a society, ensure that our young adults are acquiring the financial know-how that could shape their future?
There are multitudes of financial topics appropriate for discussion with your teenager. However, an attempt to make them proficient in all areas may result in diminishing interest. Hence, it’s advisable to focus on teaching them fundamental finance lessons. Here are ten key topics to assist you in commencing the dialogue:
1. BUDGETING:
Help your teen develop a habit of budgeting, irrespective of their income or expenses. Guide them on tracking their earnings and expenses and foster an understanding of living within their means. Illustrate the concept of categorizing their funds into segments like saving and spending, and let them understand its significance, particularly with a financial goal in mind.
2. SAVING:
Promote the practice of regularly saving a portion of their income, before any expenditures are made. Starting a savings account could easily facilitate this process.
3. EMERGENCY FUND:
Impress upon your teenager the need for an emergency fund – a safeguard for unexpected emergencies or loss of income.
4. INVESTING:
Introduce your teen to the fundamentals of investing and the dynamics of stocks, bonds, and mutual funds.
5. DEBT MANAGEMENT:
Educate them about the implications of borrowing money and the importance of timely bill payments to avoid accruing debts.
6. CREDIT SCORE:
Impart knowledge about credit scores, when they start building, and their impact on various spheres of life.
7. NEEDS VS. WANTS:
Instill in your teens the habit of differentiating needs from wants, and the wisdom of giving precedence to needs over wants.
8. FINANCIAL GOAL SETTING:
Encourage setting financial goals, either for the short term or the long term, as this can provide a tangible target to work towards.
9. WORK AND EARNING:
Emphasize the value of hard work and the correlation between efforts put in and the income earned.
10. UNDERSTANDING TAXES:
Explain the rudimentary aspects of taxes – income tax, sales tax, and how these deductions can impact their finances.
Finally, we encourage you to share your own personal finance lessons learned with your teenagers. This positive transfer of knowledge can foster an environment of open dialogue and mutual learning.
